MARCH 15, 1999
MGI Software Reports Record Q4 and Annual Revenue
TORONTO, ONTARIO--MGI Software Corp. today announced its audited
financial results for the fourth quarter and fiscal year ended
January 31, 1999. Revenue for the fourth quarter was a record
$5,331,000 (Cdn) as compared to $4,269,000 for the same quarter
last year, an increase of 25 per cent.
In the fourth quarter, research and product development
expenditures increased 12 percent to $1,659,000 as compared to
$1,483,000 in the comparable quarter ended January 31, 1998.
Marketing and selling expenses decreased by 23 per cent to
$3,456,000 as compared to $4,479,000 in the comparable period.
The net loss for the fourth quarter declined 44 per cent to
$1,591,000 or $0.07 per share as compared to $2,827,000 or $0.13
per share in the quarter ended January 31, 1998.
As at January 31, 1999, MGI Software had $10,735,000 in current
assets, which included $4,468,000 in cash and short-term
investments and $4,789,000 in trade accounts receivable.
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In 000's except Net Year Three Months
Loss per share Ended January 31, 1999 Ended January 31, 1999
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Revenue $15,962 $5,331
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Gross profit $13,717 $4,553
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Expenses $22,472 $6,181
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Interest income $304 $37
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Net loss $8,451 $1,591
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Net loss per share $0.35 $0.07
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For the year ended January 31, 1999, the Company achieved record
revenue of $15,962,000 as compared to $13,348,000 for the year
ended January 31, 1998, an increase of 20 per cent. Net loss for
the year was $8,451,000 or $0.35 per share based on a weighted
average of 24,122,095 common shares outstanding versus $6,950,000
or $0.35 per share for the prior year.
"Following the attempted merger with Discreet Logic in the first
half of the year, we have firmly established the second half, with
record sales growth and a bolstered management team and product
line, to dominate our market niche," said Anthony DeCristofaro,
president and CEO of MGI Software. "In that period, we have
successfully introduced next generation upgrades to our
award-winning products, PhotoSuite and VideoWave, and moved a step
closer to becoming a comprehensive supplier to our expanding OEM
customer base as worldwide demand for innovative digital imaging
and video solutions increases."
During the year, the Company signed software licensing and
distribution agreements with some of the world's biggest names in
consumer electronics, including Sony, Canon, Polaroid, Sanyo, NEC
Packard Bell, and JVC, while maintaining sales growth in retail
channels. In fiscal 1999, MGI's retail products were the most
popular in their categories as evidenced by leading unit sales in
the US, Canada, and the United Kingdom where MGI PhotoSuite
captured 47 per cent unit market share.
MGI products received widespread attention and praise from the
industry throughout the year. The Company received prestigious
awards from Lyra Research and Questra Consulting for Most
Compelling Digital Imaging Application of 1998; PC/Computing 1998
Most Valuable Product Award; "Graphics Software of the Year" Award
from UK's PC Home Magazine; Windows Magazine Win 100 Award; and PC
Magazine's Technical Excellence Award Finalist in software.
Commenting on MGI's revolutionary development of MGI PhotoSuite
II, PC Magazine editors said, "The Web has been the biggest
influence on software design...nowhere is this impact more evident
than in MGI PhotoSuite II, a PC photography editing package that
takes Internet integration to a new level." In all, MGI Software
received more than 20 new awards for technical excellence.
The Company worked diligently to enhance its product development
efforts with key players in the computer and imagery industries.
As a result, our superior working relationships with companies
such as Microsoft, Intel and Kodak has allowed MGI to release
state-of-the-art products in a timely manner while serving as a
showcase for technology diffusion to the rest of the industry.
The combination of these efforts has firmly established MGI
Software as a technology leader. In the fourth quarter, the
Company announced its collaboration with PictureVision, a Kodak
subsidiary and pioneer in online digital photography, to build a
worldwide imaging network. "Research and development, the
backbone of our company's existence, will continue at the present,
aggressive pace of investment," said DeCristofaro.
The APAC region has shown significant growth in computer and
photography sales and MGI Software has steadily positioned itself
to tap this emerging market. For instance, China has become the
third largest market for computers in the past year. Building on
its business partnerships with Mitsui & Co. of Japan, and Natural
Data of Taiwan, MGI has rapidly expanded its retail and OEM reach
to serve these new customers. "The demand for digital photography
and video solutions is a worldwide phenomenon and the Company will
continue its investment to develop its distribution channels
globally," added DeCristofaro.
The computer, photography and video industries have continued
their rapid course of convergence. Most recently, this trend has
engulfed the world of television and music. MGI's research
efforts are taking the Company smack into the middle of this
confluence with exciting technologies in DVD, interactive TV, and
audio. In the fourth quarter, MGI announced its "best of class"
software-only DVD solution for PC OEMs, a first in a series of
applications designed to address the broader market for digital
home entertainment.
About MGI Software
MGI Software is changing the way home and business PC owners
experience photography and video. The company has quickly become
a market and technology leader with its award-winning products and
its relationships with leading manufacturers driving the union of
computing with photography, video, and TV. MGI's partners include
leading firms in the photo industry, online service suppliers, and
manufacturers of digital cameras, computer hardware, software, and
consumer electronics. With more than 16 million copies shipped,
MGI's PhotoSuite and VideoWave are the leading brands in retail
and OEM distribution spanning 25 countries. MGI Software shares
trade on The Toronto Stock Exchange (Symbol: MGI). For more
information visit mgisoft.com.
Copyright(c) MGI Software Corp.,1999. MGI, MGI PhotoSuite, MGI
VideoWave are trademarks or registered trademarks of MGI Software
Corp. All other company and/or product names are trademarks
and/or registered trademarks of their respective manufacturers.
/T/
MGI Software Corp.
Balance Sheets
As at January 31, 1999 and 1998
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(in thousands of dollars)
1999 1998
$ $
Assets
Current assets
Cash 2,441 1,754
Short-term investments 2,027 -
Note receivable - 10,813
Accounts receivable - trade 4,789 4,504
Accounts receivable - other 362 355
Prepaids and other assets 335 555
Inventories 781 546
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10,735 18,527
Capital assets 2,444 1,487
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13,179 20,014
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Liabilities
Current liabilities
Accounts payable and accrued liabilities 4,009 3,344
Current portion of long term debt 167 -
Current portion of capital leases 28 -
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4,204 3,334
Capital leases 77 -
Long term debt 333 -
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4,614 3,344
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Shareholders' Equity
Capital stock 32,365 32,019
Deficit (23,800) (15,349)
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8,565 16,670
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13,179 20,014
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MGI Software Corp.
Statements of Operations and Deficit
For the years ended January 31, 1999 and 1998
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(in thousands of dollars, except per share amounts)
1999 1998
$ $
Revenue 15,962 13,348
Cost of sales 2,245 2,660
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13,717 10,688
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Expenses
Marketing and selling 13,199 11,610
Research and development 6,480 4,758
Administration 2,143 1,316
Foreign exchange (9) (311)
Amortization of capital assets 659 475
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22,472 17,848
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Loss before undernoted items (8,755) (7,160)
Interest income 304 210
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Loss for the year (8,451) (6,950)
Deficit - Beginning of year (15,349) (8,399)
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Deficit - End of year (23,800) (15,349)
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Loss per share (0.35) (0.35)
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Weighted average number of
common shares outstanding 24,122,095 19,958,968
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